TY  - JOUR
AU  - Dekle,Robert
AU  - Eaton,Jonathan
AU  - Kortum,Samuel
TI  - Global Rebalancing with Gravity: Measuring the Burden of Adjustment 
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 13846
PY  - 2008
Y2  - March 2008
UR  - http://www.nber.org/papers/w13846
L1  - http://www.nber.org/papers/w13846.pdf
N1  - Author contact info:
Robert Dekle
Department of Economics
University of Southern California
Los Angeles, CA  90089
Tel: 213-740-2134; dekle@usc.edu
E-Mail: dekle@usc.edu

Jonathan Eaton
Department of Economics
Penn State University
608 Kern Graduate Building
University Park, PA 16802-3306
Tel: (814) 865 - 8871
Fax: (814) 863 - 4775
E-Mail: jxe22@psu.edu

Samuel S. Kortum
Department of Economics
University of Chicago
1126 East 59th Street
Chicago, IL 60637
Tel: 773/702-8251
Fax: 773/702-8490
E-Mail: kortum@uchicago.edu
AB  - We use a forty-two country model of production and trade to assess the implications of eliminating current account imbalances for relative wages, relative GDP's, real wages, and real absorption. How much relative GDP's need to change depends on flexibility of two forms: factor mobility and the adjustment in sourcing of imports, with more flexibility requiring less change. At the extreme, US GDP falls by 30 percent relative to the world's. Because of the pervasiveness of nontraded goods, however, most domestic prices move in parallel with relative GDP, so that changes in real GDP are small.
ER  -